Trinidad & Tobago Country Statistics

LOCATION

Located 11 km (7 miles) off the north-eastern coast of Venezuela and at the most southern tip of the Caribbean archipelago, the twin-island nation of Trinidad and Tobago is strategically positioned for trade with neighbouring islands as well as with North and South America.

TRINIDAD AND TOBAGO ECONOMY

Trinidad and Tobago is the largest economy in the Caribbean Community (Caricom) and is highly dependent on its petroleum sector, which has contributed approximately 36 percent of GDP over the last six years. In the early 1990s the petroleum sector evolved from being oil dominant to a natural gas dominant sector. Despite being one of the world’s largest exporters of ammonia and methanol, the energy sector is currently undergoing a transformation. The state-owned Petroleum Company of Trinidad and Tobago Ltd. (PETROTRIN) was officially closed in late 2018, due to its low profitability. Three new companies, Heritage Petroleum Company Ltd, Paria Fuel Trading Company and Guaracara Refining Company Ltd, were formed as part of the restructuring process. Since 2015, the energy sector has seen its fair share of problems, with weak global energy prices and declining oil and gas production. Crude oil production has been trending downward, given the absence of significant new crude oil discoveries. Natural gas output declined because of disruptions related to upgrades and other maintenance work carried out by key upstream producers in recent years.

Between 2000 and 2007, the domestic economy experienced healthy expansion with real GDP growth averaging around 8 percent. Although Trinidad and Tobago weathered the 2008 financial crisis better than many other countries, economic growth has been patchy and the government has been running on fiscal deficits over the last eight years. In 2017, the economy suffered its second consecutive year of contraction (-1.9 percent), following a contraction of 6.5 percent in 2016. The decline in export earnings and the tight foreign exchange market have placed some pressure on the TT currency, which has depreciated slightly over the last two years. The TT$/US$ exchange rate averaged 6.6715 in 2016 but has since increased to 6.7813 in 2018. While the foreign reserves position has weakened, it is still considered to be healthy at 8 months of import cover as at the end of December, 2018.

The domestic economy rebounded slightly in 2018, as a result of favourable global energy prices as well as higher natural gas and petrochemical production. During the last five years, West Texas Intermediate (WTI) oil prices plummeted from an average of US$93.17 per barrel (p/b) in 2014 to US$50.79 p/b in 2017, but has since increased to US$65.06 p/b in 2018. Natural gas output improved to an average of 3.629 billion cubic feet per day (bcf/d) in 2018 from 3.356 bcf/d in 2017. Oil output continues to wane falling, to approximately 63,000 barrels of oil per day (BOPD) in 2018 compared to 72,000 BOPD in the previous year. Investment by upstream companies is expected to pick up in 2019 and this could spur drilling activity in the short-term. Oil production could rebound in 2019, as a total of sixty-six development wells are projected for the year.

In 2018, both Moody’s Investors Service and Standard and Poor’s maintained their respective Trinidad and Tobago credit rating, though the latter revised its outlook to negative. Standard and Poor’s rating agency has expressed concerns that the mild turnaround in the economy could be stifled by historical gas supply shortages, exchange rate pressure and restrictions in accessing foreign currency among other challenges. Trinidad and Tobago is still blacklisted as a ‘tax haven’ by the European Union (EU), but in spite of this, the country continues to boast a solid financial system. The authorities remain committed to becoming fully compliant in accordance with global Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) criteria.

The nation also has a well-developed industrial sector and a number of experienced industrial services companies. The domestic manufacturing sector is also diverse, with businesses in areas such as food processing, pharmaceuticals, alcoholic beverages, cosmetics, steel, cement, glass and plastics. Tobago is mainly dependent on tourism as it has strong nature and ecotourism appeal. Notwithstanding, the business sector is not without challenges. The nation is currently ranked 78th out of 140 countries in the World Economic Forum’s Global Competitiveness Report 2018 and over the last five years, poor work ethic, inefficient government bureaucracy, corruption and crime and theft have been the main problematic factors. In the World Bank’s Doing Business 2019 Report, Trinidad and Tobago is ranked 105th out of 190 countries in ease of doing business with weak scores in key areas such as enforcing contracts, paying taxes and registering property.

Government fiscal operations improved over the last couple of years and the debt burden has been reduced from 62.1 percent of GDP in fiscal 2017 to 60.9 percent of GDP in fiscal 2018. The Heritage and Stabilization Fund (HSF), which acts as a buffer for the economy, has increased in value from US$5,762.5 million as at September, 2017 to US$5,979.4 million by September, 2018. Over the next two years, the authorities are expected to remain committed to fiscal consolidation and driving structural reforms. However, diversification of the Trinidad and Tobago economy is progressing at a slower-than-expected pace and it is highly likely that the energy sector will continue to be the mainstay for the economy over the next decade.